The present invention generally relates to methods and apparatus for facilitating electronic commerce in area rugs, and more particularly to the creation of a virtual marketplace for handmade rugs, and rugs in the style of handmade rugs.
Unlike the market for commodity items, the market for handmade rugs tends to be small and fragmented. For example, in even a small community there may be dozens of places to purchase a pair of blue jeans, whereas even the largest cities may have only a relatively small number of places to buy a handmade rug. The small size and fragmented nature of the market for handmade rugs leads to slow inventory turnover rates and correspondingly high retail markups.
Handmade rugs are principally produced in China, Turkey, Pakistan, India, Nepal, and Iran and exported to one of three primary distribution hubs: New York, United States; London, United Kingdom; or Hamburg, Germany. From there, rugs move through a wide variety of international wholesale distribution channels to the retail channels. The retail channels include specialty rug stores, department stores, national chain stores, furniture stores, and home improvement centers. In the United States, there are over 220 importers and about 4,600 retail locations offering handmade rugs.
It is estimated that retail sales of new handmade rugs are nearly $1 billion annually in the United States, while used rug sales are over $2 billion annually. On a global basis annual sales of new and used handmade rugs approach $3.4 billion and $8 billion dollars, respectively. These sales levels are achieved despite the inefficiencies in the handmade rug market place.
Because of the extremely slow inventory turnover rate, rug retailers usually maintain only a small inventory of rugs. According to the Oriental Rug Retailers Association, there are 4,602 locations in the United States that sell handmade rugs, each having an inventory of between 50 and 100 rugs in each size category. Although a rug merchant may have between 1,000 and 2,000 rugs in inventory, it is likely that fewer than 100 rugs will be of any specific size and shape. Even fewer rugs will also have a color or other attribute a potential purchaser, or customer, is seeking. The customer may, therefore, have to visit many merchants to locate a handmade rug compatible with their needs and preferences.
In addition, typical consumers are generally not very knowledgeable about handmade rugs. To make an informed buying decision, a potential purchaser must, therefore, invest considerable time and effort learning about handmade rugs. This may be difficult, because unlike the many books, magazines, and television shows related to automobiles, consumer electronics, and other commodity items, there are few resources related to handmade rugs. Not only do consumers lack technical knowledge about handmade rugs, but also they typically do not know what their tastes or preferences in handmade rugs might be.
The burden of educating a customer therefore falls on the rug merchant. The merchant should ensure that a customer understands the many different aspects of handmade rugs and has seen enough rugs to determine their preferences with respect to handmade rugs. Otherwise, a potential purchaser may not purchase a rug believing it to be over-priced. Or, a customer may become dissatisfied with a purchase because of an unrealistic expectation about a rug""s future value, or because the rug does not match their preferences.
There are additional inefficiencies in the market for handmade rugs. For example, rug manufacturers, importers, exporters, merchants, and customers often use different terminology to refer to the same characteristic. This lack of a common terminology interferes with communication and the exchange of information within the handmade rug marketplace. For example, when a rug is referred to as being Persian it is not clear whether the rug was actually woven in Iran or whether it was woven in India but is of a Persian style of design.
A related problem is the lack of an equivalent of the Universal Product Code (UPC) system in the rug industry. Lack of a UPC-like system makes it impossible to categorize handmade rugs. As a result, various entities in the rug industry may refer to a rug in literal terms. For example, a rug dealer might describe a rug on its tag or on an invoice as a xe2x80x9cblue, contemporary, Persian-Kashan made of wool.xe2x80x9d However, it is not clear what about the rug is blue or what Kashan refers to.
It is also difficult to assess the true value of a handmade rug because no standard means of classification exists. As a result, some insurance companies may not insure handmade rugs. Similarly, financial institutions are generally unwilling to finance rug purchases because they are unable to accurately appraise the rugs. The handmade rug industry is, therefore, one of the few industries where financing options are few even though average purchases are over $1,000. Potential purchasers are often faced with using cash or high-interest credit cards to finance a purchase-even for a fine handmade rug costing over $100,000.
Lastly, because the rug industry lacks a standard means of classification, there exists no universal method of identifying a specific handmade rug. This makes it impossible for various entities within the rug industry to exchange information about a particular rug. At best, two rug dealers may refer to a rug using arbitrarily-assigned, internal product identification numbers which is cumbersome and prone to errors. For example, in trading among themselves a dealer cannot be sure that a specific rug is being traded, rather than not just a similar rug.
These inefficiencies in the handmade rug market have a negative impact on the overall financial performance of the dealers and retailers. Though margins are high, inventory turnover is extremely slow, reducing return on capital.
Even the simple task of viewing rugs is a slow, tedious, and labor-intensive process. Although some rugs may be hung up on a wall or partition, most rugs are stored flat, one on top of another, in stacks on the floor or on a low platform, so only the rug on top is readily visible. Even though the rug merchant may know where each rug in the inventory is located, it may be necessary to manhandle many rugs to uncover a particular rug for a customer to view.
After expending time and effort showing a potential customer many rugs, it may happen that no rug in the merchant""s inventory matches the customer""s needs. This is undesirable for the customer, since it means searching through the inventory of yet another rug dealerxe2x80x94assuming there are other dealers within a reasonable distance. It is equally undesirable for the merchant due to the lost sale.
In view of the foregoing, it would, therefore, be desirable to facilitate the buying and selling of handmade rugs.
In addition, it would be desirable to educate customers about handmade rugs and to help them discover their taste or preferences in handmade rugs.
It would also be desirable to provide a standard classification system and terminology for handmade rugs.
It would also be desirable to provide a means of accurately describing and identifying handmade rugs.
In addition, it would be desirable to provide methods and apparatus for accurately appraising a handmade rug, and to enable the development of markets for insuring and financing handmade rugs.
It would also be desirable to provide methods and apparatus by which a customer may view a large inventory of rugs without having to visit many individual rug dealers.
It would also be desirable to provide methods and apparatus to assist a rug dealer reduce the effort required to show rugs to a potential customer.
And it would also be desirable to provide methods and apparatus to reduce the time necessary for a rug buyer and seller to finalize the selection of a rug.
In view of the foregoing, it is, therefore, an object of the present invention to facilitate the buying and selling of handmade rugs.
In addition, it is an object of the present invention to educate customers about handmade rugs and to help them discover their taste or preferences in handmade rugs.
It is another object of the present invention to provide a standard classification system and terminology for handmade rugs.
It is also an object of the present invention to provide a means of accurately describing and identifying handmade rugs.
In addition, it is object of the present invention to provide methods and apparatus for accurately appraising a handmade rug, and to enable the development of markets for insuring and financing handmade rugs.
It is another object of the present invention to provide methods and apparatus by which a customer may view a large inventory of rugs without having to visit many individual rug dealers.
It is also an object of the present invention to provide methods and apparatus to assist a rug dealer reduce the effort required to show rugs to a potential customer.
And it is an object of the present invention to provide methods and apparatus to reduce the time necessary for a rug buyer and seller to finalize the selection of a rug.
These and other objects of the present invention are achieved by providing a unique system of classifying handmade rugs, and by leveraging the capabilities of the Internet to provide an on-line inventory of handmade rugs available from many disparate sources. Digital images of the rugs in the inventory are captured at very high resolution and characterized according to a classification system of specific rug attributes. The images enable a user, whether a consumer, customer, merchant, or dealer, to view each rug in detail. Images and attributes of rugs are cataloged in a database so that the rug inventory may be searched based on desired attributes of a rug or by means of image analysis and correlation tools.